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Mr. Edward Davey (Kingston and Surbiton) (LD): The hon. Member for Nottingham, North (Mr. Allen) made an important and powerful speech. He made the case for local democracy extremely well and argued that the Government, in this measure as in others, are attacking local democracy, which is much to be regretted. Nottingham is my home town and I know that the people of Nottingham will be flabbergasted at the idea that the savings that the ODPM, in Whitehall, is demanding are less than the cost of re-billing.
In responding to interventions on that point, the Minister argued that Nottingham is inefficient, that the billing costs are too high and that the council should improve its collection of council tax. Those points may be valid, but capping Nottingham is not the way to sort out inefficiency or a poor record for council tax collection; it is the wrong way, as the Minister should know.
Unfortunately, the order is yet another attack on local democracy, and there have been quite a few recently. We have seen attacks on local police authorities and local education authorities, and unless there are some big surprises, tomorrow's statement will probably be the final nail in the coffin of new localism.
The Minister has won many friends in local government by what he has said. He goes around councils and visits the LGA, and people feel reassured; but, unfortunately, he has come to the House to defend policy decisions taken by the Governmentpossibly in No. 10 or the Treasury, perhaps not in the ODPM, but he has collective responsibility for themthat amount to an attack on local government.
The Minister, along with many of his colleagues, used to vote against capping when the Conservatives were doing it year in, year out. As the hon. Member for Brentwood and Ongar (Mr. Pickles) said, the Minister used to argue against capping. I hope that he realises the extent of the hypocrisy tonight. He knows that a lot of the trends that are happening under the Government are bad for local democracy. On the LEA point, he spoke strongly against that in May, so he realises that the Government are going backwards in their attempt to strengthen local democracy.
I gave the example of Nottingham, but the Minister will not be surprised that I want to talk about two other examples. Shepway district councila small council is being capped tonight, and rebilling will cost it £93,000. Nottingham's budget is more than £300 million, but Shepway's budget is £15.5 million. Its rebilling costs will be almost £100,000, which is quite astonishing.
The Minister claimed that, in deciding which councils to cap, he would take account of history and look at councils' records. Shepway's council tax is below average for a district council in Kent. In the past 10 years, the average rise in its council tax has been a mere 3 per cent. It is hardly a council with a high council tax.
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Unfortunately, when the new administration took over and looked at the books, it discovered that not only did Shepway have a low council tax, but that it had no financial reserves. Indeed, there was a black hole: the council was spending more than it was raising or receiving from central Government. It had to take serious action to put the finances in order. That shows the local issue in Shepway, and centralised capping cannot take that into account.
Shepway council must now cut severely. Council staff will be laid off. What effect will that have on the performance indicators and the requirements from Whitehall to improve performance in Shepway? It will undermine them. Shepway will have to remove backing for funding programmes in the local community that were receiving match funding from central Government to hit other performance indicators laid down by Whitehall. Many of the council's economic regeneration ideas, which involve long-term investment to gain benefits, will be hit. In an area of relative poverty, such as Shepway, tourism is very important, yet the cuts that Shepway must make will hit that industry badly.
Torbay's increase was under 10 per cent. We know that that figure is relevant, and we have seen it in the press. Some of the referendums run by the local paper showed that people accepted the 9.9 per cent. increase in council tax because it would still leave Torbay with one of the lowest council taxes in the south-westbut the Minister in Whitehall knew better than the local council, the local paper and the local people: he decided that the council must be capped.
Mr. Adrian Sanders (Torbay) (LD): Is my hon. Friend aware that, taken over two years, the increase is lower than any of the other councils in the area and that, taken over three years, it is still lower than any of the others? Where is the justice in the proposal?
Mr. Davey: My hon. Friend is absolutely right. Again, the proposal goes against the Minister's assurance that he would take account of recent history. He has clearly failed to do so. We thought that the Government had moved from crude capping, but it is still there. As my hon. Friend has told me in private conversations, Torbay council receives less in grant per capita than the average unitary authority. Indeed, it receives £26 per resident less than the average unitary authority. Not only does it have a recent record of low council tax, but it receives less support from the Government. One can understand why the people of Torbay support the council.
Mr. Davey: I shall give way to the hon. Gentleman, but I wonder whether he will be consistent.
Mr. Steen:
I have urged the Government to cap Torbay, and I support thatit was the right decisionbut I question something else. The Government have capped Torbay, but they will charge £100,000 for the postal distribution to achieve a saving of about £10 per person. I ask the Government to review that position. I have supported the Government's view, but I now think that they should not charge the £100,000, but give a credit next year. That is why I oppose the order.
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Although I support the capping, I do not support the way that the Government are doing it. That is a different point.
Mr. Davey: I very much regret giving way to the hon. Gentleman. I should have thought that he would say his constituents pay higher council tax than the people of Torbay and that they would therefore love Torbay's council tax. I wondered whether he would be consistent, but we heard from his own lips that he supports capping and worries about the consequences of capping. I know that he likes to have it two ways most of the time, but I am afraid that he cannot do so when we are debating on the Floor of the House.
The hon. Gentleman is right that rebilling will cost a staggering £100,00010 per cent. of the required savings. There will be cuts in things for which the people of Torbay votedfor example, the flowerbeds. That may not seem important to some hon. Members, but it is very important to tourism in Torbay, in attracting visitors to the area and in ensuring that Torbay is a beautiful town that people want to visit. There will be cuts in the toilets that people want. There will be a lot of cuts that will hit the people of Torbay very seriously. What is the benefit? It is some 25p a week. I do not think that many people from Torbay will write to the Minister to thank him for that extra 25p, when they know that Labour Ministers are responsible for the cuts in the area.
The order is particularly regrettable given that the LGAa cross-party body of Labour, Conservative, Liberal Democrat and independent councillorshas argued long and hard against capping. It is extremely angry and disappointed about the Government's decision. Anyone who has read the LGA's brief, to which the hon. Member for Brentwood and Ongar referred, will see the extent of that concern. As the hon. Gentleman said, the LGA says that capping is totally inconsistent with what Ministers have said in White Papers, in relation to the CPA process and in their speeches. Capping is inconsistent with stated Government policy.
As the LGA says, one would have thought that capping was unnecessary this year. The Government cajoled, encouraged and bullied councils to reduce their council tax rates. The Minister was right to do so. The Government used the threat of capping for that purpose, and they were successful to an extent. So why do they need to go ahead with capping? Given that the average rise this year is one of the lowest since the council tax was, unfortunately, introduced by the Conservatives, one would have thought that the capping powers were not necessary.
As the LGA also says, the proposal is unworkable. We have talked about the billing costs, but there is a much more fundamental point to make about prudent financial management. Councils must start to think long term. They must plan their council tax rates and budgets for the long term, and the Minister has recognised that. Last week, in the comprehensive spending review, we heard that, at long last, the Minister and the Chancellor will allow local authorities to have three-year settlements because they recognise the importance of long-term planning, but capping goes exactly in the opposite direction. Some of the services that the councils listed for capping will cut represent investment that they wanted to make to provide returns to the public in better
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services and better value for money in a few years' time. The proposal constitutes exceedingly bad financial practice.
Capping has never been and is not the solution. The solution is local democracy. Let the people vote. Let them vote out councils of whatever party when they do not like the services that they are given at the cost that they are charged. That is the solution.
Tomorrow, we will be promised a solutionwe will be given the bait of a solution. However, many of us doubt whether it will be forthcoming and whether the rhetoric that will come tomorrow will match the hyperbole that we heard at the start of the balance of funding review. Tinkering with the council tax will not deal with the underlying unfairnesses and the balance of funding problem. For some people and some councils, what may be on offer tomorrow might make the problem worse. Therefore, the Liberal Democrats will vote against the order to uphold local democracy and to support local peoplewhether they are in Nottingham, Shepway or Torbay.
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